Science and technology

Newspaper advertising

Getting worse

IN THE Pew Research Centre's annual “State of the News Media” report, which came out yesterday, there is an intriguing statistic: last year, American newspapers lost $10 of print advertising revenue for every $1 they gained in online ad revenue. The year before, the ratio was just $7 to $1.

Why? Tom Rosenstiel of Pew's Centre for Excellence in Journalism notes that it's not so much that print declined faster—though it did, a little—but that online grew more slowly. The data, from the Newspaper Association of America, show that print revenues fell by $2,026m in 2010 and $2,103m in 2011. The online sort rose by $299m in 2010 but only $207m in 2011. In the words of Adam Smith—no, not that Adam Smith, but the futures director at GroupM, WPP's media investment management arm, whom I consulted about this—newspapers are “apparently becoming better at losing money on print than at making it back on digital”.

Now, it would be a mistake to read too much into a single year-to-year comparison. But a more historical look shows a clear trend (see the chart on the left). For a few years, newspapers' online advertising grew at nearly the same rate as the online market in general. But since 2008 newspapers have been falling behind badly.

That reflects the rising power of other sites that do a better job online of reaching the news media's audiences. Last month (before the 2011 data came out), eMarketer predicted that in 2011 Facebook, Google, Yahoo!, Microsoft and AOL combined would have 47% of the market for online display advertising, the kind for which they compete most directly with newspaper sites. By 2014, it reckons, their share will have grown to 54% (see the chart on the right). Tangentially, 2012 is the year when eMarketer thinks online advertising will overtake print advertising as a whole.

In other words, having seen other websites take a huge bite out of newspaper print revenues—first classified ads, which were swallowed up by online listings services such as Craigslist, and then display ads—the papers are now watching them nibble away at their digital lunch too. That won't be a surprise to anyone in the media business, where "disintermediation" has been the word on everyone's lips for a while. But now that the statistical noise of the 2008-09 financial crisis is starting to clear, it's becoming ever more evident.

I'd say the problem is that newspapers are local and they lose that advantage when on the net. They truly blew it on classifieds; I still can't find a usable newspaper classified site and there are obvious templates available. But the main thing is just as easy for others to target ads for you. It can even be easier; if I'm reading a St. Louis paper online from another city, many of the ads aren't useful to me.

Newspaper advertising may be suffering but I think it’s not globally doomed. There are still parts of the world where newspaper remain an effective advertising platform. In fact, print will still be effective as long as people and businesses will be to use it effectively and appropriately. Read this article to know just where print is headed: http://smallbusiness.printplace.com/2012/10/13/print-and-advertising-whe...